Ternium Posts Unexpected Loss on Usiminas’s Brazil Sales

Ternium SA, the Luxembourg-based steelmaker, reported an unexpected fourth-quarter loss after a writedown on the company’s investment in Usinas Siderurgicas de Minas Gerais SA.

A net loss of $253.8 million, or $1.29 per American depositary share, compared with a profit of $104.7 million, or $0.53, in the year-earlier period, the steelmaker said in a statement distributed by Marketwire today. Banco Itau BBA SA analyst Marcos Assumpcao estimated a $75 million profit in a Feb. 17 report. Ternium’s ADRs tumbled in trading today.

Waning growth in Brazil, Latin America’s largest economy, led Ternium to write down its investment in Usiminas, as the Belo Horizonte, Brazil-based company is known, by $275.3 million. Its parent Techint, owned by Italy’s billionaire Rocca family, last year joined Usiminas’ controlling group after acquiring a 27.7 percent voting stake through Ternium and steel-pipe maker Tenaris SA.

Brazil still offers “great opportunities” for Usiminas, Chief Executive Officer Daniel Novegil said on a call with analysts today. Brazilian government measures to stimulate the economy will succeed and Usiminas will become a “very efficient and profitable company” after some time, he said.

The ADRs fell 5.6 percent to $21.34 at 12:30 p.m. in New York today, bringing the decline so far this year to 9.3 percent.

Ternium’s fourth-quarter steel shipments rose 1 percent from a year ago to 2.17 million metric tons. They fell 4 percent from the previous quarter.

Latin American steel demand in 2013 will be higher than the previous two years, Novegil said, without providing figures. The company is on time and budget to add a new unit in Mexico after steel demand grew there by 9 percent in 2012, he said.

ThyssenKrupp Plant

Ternium is evaluating the purchase of ThyssenKrupp AG’s plant in Brazil, Novegil said. Studying the option to buy the unit “makes sense” because Ternium is one of the world’s largest buyers of steel slabs such as the ones produced at the plant in Rio de Janeiro state, he added.

Ternium will consider purchasing the unit without partners and is not looking to buy ThyssenKrupp’s Alabama plant, Novegil said. ThyssenKrupp, Germany’s biggest steelmaker, is selling its plants in Brazil and the U.S.

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